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A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $ 3 2 0 , 0

A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $320,000 whereas a small generator costs $230,000. The cost of operating the generator would be $200,000 per year for the large and $230,000 for the small. Either generator will last for five years. The cost of capital is 15%.

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